You have a choice between two $500,000 loans. The first loan is fixed for 10 years @ 5.25% and amortized over 25 years. The second loan is fixed for 15 years at 5.5% and amortized over 25 years. If you took the 5.25% loan and invested the difference between the two payments at 12% then at the end of ten years started taking a monthly draw down of the investment that is still returning 12% to add to your current payment, what interest rate could you then support to end up at an equivalent point at the end of the 15 year loan?
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Answer for 06/01/2015:
(N=300,I=5,PV=500,500,FV=0) PMT= -2925.87